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Challenges of Employee Retention – Why It’s Becoming More Difficult

The challenges of employee retention have continued to grow in recent years. The Great Resignation is impacting businesses in all industries. Below, we break down why that might be, and why employers should care.

Regardless of industry or size, companies all over the world are feeling the effects of “the Great Resignation”. Last year, April alone saw 4 million workers quit their jobs according to the Job Openings and Labor Turnover Summary. In today’s job market, there are more challenges of employee retention than employers have ever had to deal with. No more than a generation ago, we saw trends of employees gaining their education/skills and entering companies where they would work until retirement. Most employers have recognized that this is a trend of the past. However, employers still face certain challenges of employee retention and suffer from high employee turnover. Healthy levels of retention and low employee turnover are crucial for the success of any organization.  

What are the current challenges of employee retention? 

Unsurprisingly, turnover continued to increase for many reasons throughout 2020, and 2021 alike. Much like the stock market, the housing market, and other economic areas, the job market has been volatile throughout the pandemic. According to the Human Resource Executive, there is a pretty extensive list of items that have contributed to “the Great Resignation”. Bear in mind that most of these challenges are on top of the already existing, general reasons for employee turnover. 

Pandemic stress 

One of the biggest challenges of employee retention at present is general pandemic stress. Different industries are being hit harder by this challenge, such as security, home healthcare, long-term care, and hospitality. It encompasses multiple different impacts of the pandemic. Employees are stressed about getting sick, infecting family members, or general anxiety from increased negative media coverage. Employers are struggling to reassure employees and keep them safe while at work due to their exposure to people/patients. As cases continue to rise and variants continue to emerge, this stress continues to grow.  


Tying into the point above, many industries and businesses are being devastated by the uncertainty of their future. Many businesses have not been able to adapt their product/service offering to the current situation. This leaves their employees unsure of what lies ahead. Along with the other challenges of employee retention, this one is external, and out of the control of many employers. Even as the pandemic comes to an end, employees are fearful for their future in their current roles, not only due to lack of job security (which we will cover below) but due to how the pandemic has changed their industry as a whole. 

Longer working hours  

While some employees are facing a lack of hours, others are experiencing other challenges. Some employers have had to reduce their workforce, which has resulted in remaining employees working longer hours. Some hourly workers are grateful for the extra cash, while others are experiencing severe burnout. For employers, one of the biggest challenges of employee retention at present is finding, and keeping employees that are willing and able to work longer hours for the duration of the pandemic.  

Lack of HR advocacy 

One of the more complex challenges of employee retention is the lack of HR advocacy that has come out of the pandemic. HR managers generally find themselves in the sticky position of having to keep the interests of the business a priority. For some, this has caused tension with employees, who feel their rights and interests should be the number one priority. While HR managers need to keep businesses staffed and running, employees are worried for their health and safety, and feel a lack of support and advocacy from management. HR managers need to find a balance between the two, or they quickly see the results, of employees simply leaving. 

Working from home 

While the move to remote work has suited some employees, not all workers are fortunate enough to have the required space and resources to work from home. Not only that but not all workers have the ability to work from their home, where they can limit exposure. Workers in the healthcare, hospitality, manufacturing, and security industries are continuing to go to the workplace, where they feel unsafe and vulnerable. 

Lack of job security 

Finally, another challenge of employee retention in the last two years is a lack of job security. Employers are having to hire more temporary, hourly workers to bridge gaps etc. However, these employees are perhaps the most vulnerable. The lack of job security leads them to seek work elsewhere, in more secure industries and positions. Employers are struggling to provide job security given the ups and downs of the pandemic, leaving them victim to the churn of employee turnover.  

All of these factors contribute to the challenges of employee retention that employers face, and not many organizations have been able to overcome them just yet. While some of these factors are external, such as the pandemic, it is the internal factors and responses that are truly driving employee turnover. While unemployment rates skyrocketed to a whopping 14.8% in April of 2020, this rate had fallen to just 5.2% by August of 2021. Alongside that, the rate of job openings increased from 3.4% in April 2020 to 6.9% in June 2021. This improved state of the job market gave workers even more confidence in the job market. This makes it easier for them to leave roles they are unhappy in. It is becoming increasingly clear that employers need to work hard to overcome the challenges of employee retention. 

Why is Employee Retention Important? 

Why does all of this matter? So, what if your employee retention is low, right? Wrong. Employee retention reflects the overall health and success of any organization. Poor employee retention creates stress, time loss, and other costs that have a negative impact on your business outcomes.  

Turnover Expenses 

We’ve previously taken a deep dive into the costs and causes of employee turnover. In a nutshell, the costs of replacing an employee range anywhere from 16-213% of the replaced employee’s salary. As a whole, turnover expenses cost U.S businesses up to 1 trillion dollars annually. These costs are generally made up of job advertising, the interview process, onboarding and training costs.  

Lost Knowledge 

While the financial costs are often the most spoken about impact of poor employee retention, the loss of knowledge is equally as unfavorable. A recent interview with Ari Bixhorn highlighted that on average, 42% of the skills and expertise required to capably perform in a given position will be known only by the person currently in that position. When we take this into consideration, it shows that a new hire will need to learn 42% of their role from scratch, regardless of experience and education.  

Decline in Productivity 

Further research from Bixhorn suggests that on average, a new hire will spend almost 200 hours working inefficiently. During this time, they will be relying on colleagues for support, making errors, or trying to reinvent the wheel in an effort to meet expectations. This, in turn, leads to employee frustration, production/service delays, and other impacts on productivity, and ultimately, your bottom line.  

Our previous posts break down steps that employers can take to improve their employee retention. With the volatile job market and other external factors, the main takeaway should be that how employers deal with external factors and how they react matters. Employees are without a doubt, any business’s most important asset, so working to keep them should be your priority.

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